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European stocks lower; German PPI unlikely to stop ECB hike

Published 21/11/2022, 08:20 pm
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By Peter Nurse 

Investing.com - European stock markets traded lower Monday as investors fretted over the likelihood of future monetary tightening and the impact on future economic growth.

At 03:55 ET (08:55 GMT), the DAX index in Germany traded 0.5% lower, CAC 40 in France fell 0.3% and the FTSE 100 in the U.K. dropped 0.3%.

Recent lower-than-expected U.S. consumer and producer inflation prints had boosted global markets on hopes that the U.S. Federal Reserve would pivot away from aggressive interest rate hikes.

German producer prices fell unexpectedly on the month in October, data showed Monday, dropping 4.2% on the month, compared with expectations for a rise of 0.9%.

This is good news, but still pales alongside the annual reading of Eurozone inflation which soared past 10% at the end of last month, up from 9.9% in September. 

European Central Bank President Christine Lagarde said on Friday that interest rates will need to be lifted to levels that restrict economic expansion in order to combat inflation at those uncomfortable levels.

With this in mind, minutes from the ECB meeting and the Fed later this week will provide markets with more direction on the outlook for interest rates.

In corporate news, Compass Group (LON:CPG) stock fell 2.5% after the caterer warned that operating margins are unlikely to improve next year as it battles inflationary pressures. 

That said, the company increased its annual dividend and announced a new buyback of £250 million (£1=$1.1818), at the end of a year in which revenue rose by 42% and underlying operating profit rose 87%.

Julius Baer (SIX:BAER) stock rose 0.1% after the Swiss lender said it was on track to reach its 2022 profitability targets, despite "challenging market" conditions taking a big bite out of its assets under management.

Anheuser Busch Inbev (EBR:ABI) stock fell 0.2% after Friday’s late decision by FIFA authorities to ban the sale of alcohol, primarily its Budweiser brand, at the stadiums as the Qatar soccer World Cup got underway on Sunday. 

Oil prices fell to near two-month lows Monday, weighed by demand concerns from China as COVID concerns in the biggest crude importer in the world increased.

New COVID case numbers in China remained close to the highs seen in April, while the country saw its first Covid-related death in almost six months on Saturday and another two were reported on Sunday.

By 03:55 ET, U.S. crude futures traded 0.5% lower at $79.75 a barrel, while the Brent contract fell 0.8% to $86.94. 

Both benchmarks closed Friday at their lowest since Sept. 27, with the U.S. contract down 10% and Brent 9% lower, the biggest weekly decline since August. 

Additionally, gold futures fell 0.6% to $1,743.45/oz, while EUR/USD traded 0.7% lower at 1.0255.

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